HomeMy WebLinkAbout8.2 RedevFeasibility Study CITY CLERK
File # 0460-10
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: February 1, 2000
SUBJECT:
Redevelopment Feasibility Study
Report Prepared by: Christopher L. Foss,
Economic Development Director
ATTACHMENTS:
1. Redevelopment Feasibility Study dated January 25, 2000
RECOMMENDATIO--/N::~,~/~ ItandiS takeStaff's recommendatiOnno further action, that the City Council receive the report
FINANCIAL STATEMENT: No fiscal impact.
DESCRIPTION: The City Council has identified the preparation of a Redevelopment
Feasibility Study as a high priority for the FY 1999-2000 Goals and Objectives.
BACKGROUND: In 1945, the California Legislature enacted legislation, the California
Redevelopment Act, which provided local governmental entities with the tools to redevelop urban areas
that had fallen into disrepair both physically and economically, generally considered "blight." California
Community Redevelopment Law, Health and Safety Code section 33000 et seq. ("Redevelopment Law")
permits cities to adopt and implement redevelopment plans by providing the legal and financial tools to
mitigate certain physical and economic blighting conditions. The legislation also required that, before a
legislative body (i.eo City Council) can pass an ordinance declaring the need for redevelopment, a
redevelopment feasibility study must be undertaken to determine the degree of blight, if any, that exists in
the community.
As part of the City of Dublin's FY 1999-2000 Goals and Objectives (D-4), staff was directed to engage a
consultant to complete the necessary feasibility analysis. On October 5, 1999, the City Council approved
a contract for $33,895 with the Rosenow Spevacek Group to perform said feasibility analysis. The
contract called for RSG to study six defined areas:
1. Western Dublin BART Station (Golden Gate Drive south of Dublin Boulevard)
2. Dublin Place Shopping Center (Montgomery Wards/Target, etc.)
3. Village Parkway (between Dublin Boulevard and Amador Valley Boulevard)
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COPIES TO:
ITEM NO.
4. Donlon Square Center (Donlon and Dublin)*
5. Shamrock Village Shopping Center (northeast comer of San Ramon and Amador Valley)
6. San Ramon Village Shopping Center (southeast comer of Alcosta and San Ramon Road)
7. Dublin Boulevard (Sierra Court to Dougherty Road)*
8. Scarlett Drive area (1-580 to Dublin Boulevard/Dougherty to Scarlett Court)
(* added subsequent to discussion with City Staff)
The Redevelopment Feasibility Analysis was designed to assess the legal and financial implications of
formulating a redevelopment project area inclusive of the eight areas defined above. The current
Califomia Redevelopment Law (California Redevelopment Law Reform Act- AB 1290- adopted 1994)
mandates that the feasibility findings include both physical and economic blight (Health and Safety Code
Section 33031). Specifically, the law requires that conditions set forth in Section 33031 must be so
prevalent and substantial as to cause a reduction of, or lack of, proper utilization of the area to the extent
that it causes a serious physical and economic burden to the community. The law expects that the burden
could not be reversed or corrected by private development, governmental action or both, without
redevelopment. It is a far stronger burden of proof of blight than was required prior to 1994.
California Redevelopment Law (Section 33320.1) requires prospective redevelopment project areas to
meet several criteria including urbanization and blight. The law requires that not less than 80% of the
proposed project area be urbanized- the Dublin study areas meet that criteria as all 273 acres are
urbanized as they are all surrounded by developed property on three sides. The law also requires that the
project areas must also be blighted, both physically and economically. Section 33031 of the law provides
specific definitions. Case law has found that the blight must predominate and impact the entire area to be
considered legal.
REPORT FINDINGS:
RSG did a preliminary study of potential blighting conditions in the eight identified subareas in Dublin. It
should be noted that in order to prepare and adopt a redevelopment plan involving a study area, blighting
conditions would need to be further documented, along with a more extensive analysis of their burden on
the community and the inability of the private sector or the City to alleviate these conditions without
redevelopment RSG began the study in November, 1999 with a windshield survey of the designated
areas in which RSG staff noted physical blighting conditions and property vacancies. RSG also studied
ownership and parcel configurations from the Alameda County Assessor's Office as well as interviewed
local real estate brokers. RSG also completed a financial feasibility analysis to determine the amount of
tax increment revenue that could be generated from the proposed project area. By way of background,
most redevelopment activities are traditionally funded by tax increment revenues. Tax increment
revenues are property tax revenues generated by increases in assessed values over an established base year
value. Redevelopment law allows for redevelopment agencies to collect those property tax increases over
the base year value (property tax value at date of project area establishment). In essence, future tax
revenues are redistributed when a project area is created.
The tax increment revenue is distributed based on a mandatory formula that requires: a) 20% of the tax
revenue be deposited into a low and moderate income housing fund to provide and/or improve the
community's affordable housing and b) statutory payments to each of the taxing agencies that collect
property taxes from the project area. The mandatory "pass through" of tax increment revenue generally
requires that $0.31 of every $1.00 of tax increment revenue be allocated to affected property tax agencies,
$.020 be allocated to the 20% set-aside housing fund, and $0.49 be retained for non-housing purposes.
The report findings are as follows:
,
.
o
RSG concluded that the formation of a redevelopment project area within the Study Areas would
generally not be legal or financially viable at this time.
RSG's research and analysis could not document both the physical and economic blighting
conditions required by Redevelopment Law, in subareas 1,2,3,4,5,6, and 7.
RSG concluded that subarea 8 (Scarlett Drive) exhibits some examples of both physical and
economic blight, but the area does not represent a redevelopment project area that is large enough
to facilitate an economically viable redevelopment program.
RSG concluded that redevelopment may be a necessary tool in five to ten years, if any of the
subareas experience worsening physical and economic conditions.
RSG recommends that the City continue to invest in streetscape improvements, work with
property owners to improve properties, and implement marketing programs to stimulate patronage
and investment and reinvestment in the subareas.
Of the eight subareas studied by RSG, only subarea 8 - Scarlett Court - reflected a concentration of
blighted properties. The blighting conditions noted by RSG included dilapidation and deterioration of
certain industrial buildings, limited economic viability of certain buildings due to inadequate parking and
obsolete buildings, and properties with a history of hazardous contamination that could ultimately affect
property value(s). Despite the fact that subarea 8 contains examples of both blighting conditions required
by redevelopment law, RSG found that the financial feasibility of creating a redevelopment project area
using only subarea 8 would be very difficult to implement for three major reasons. First, they found that
the small size of the area (21 parcels - 45 acres) and the limited amount of developable area could stymie
the tax increment revenue growth necessary for the project area. Second, there are costs involved in the
establishment of a redevelopment project area. The redevelopment plan adoption process calls for
environmental review, redevelopment document preparation, retention of legal counsel, and substantial
public noticing and public hearing requirements. The total costs could range from $200,000 to $300,000
and could double if legally challenged. Third, a redevelopment agency incurs annual operating costs that
could average from $50,000 to $200,000 annually to complete audits and annual reports, adoption of
implementation and housing plans, and the administration of the tax increment revenues. RSG would not
recommend proceeding with the redevelopment 'project area due to the potential high costs of
implementation.
RSG reviewed the financial implications of subarea 8 given two development scenarios: status quo and
office development (highest and best use). RSG found that subarea 8 would create a modest amount of
tax increment revenue over the 45-year cOllection period allowed by redevelopment law. RSG estimates
that the status quo project would collect $15 million over the 45-year period; whereas $70.7 million would
be collected over the same period with new office development. Statutory payments (20% set-aside and
mandatory pass-through) reduce that figure to $7 million and $37 million, respectively. Those numbers
are further discounted when figured at present value to equal $2.2 million and $11.8 million, respectively,
in today's dollars.
RSG further studied the potential costs to the Agency to participate in the redevelopment of
approximately 10 Scarlett Court properties in order to assembly, consolidate, and write-down the costs of
the land for future development. These costs involve land purchase, relocation, loss of goodwill,
demolition, and fixtures and equipment costs which RSG estimates to be approximately $30.9 million. In
order to effectuate this project, the City woUld be required to advance to the Agency the $30.9 million
acquisition costs. The advance would be repaid by land sale proceeds (approximately $15.7 million- $16
o
per square foot), and the project would have an appr ximately $15.2 million shortfall that would require a
redevelopment or General Fund subsidy. This shortfall would require all of the tax increment funding for
the 45-year life of the project area ($10.1 million) as well as a subsidy from the General Fund or another
source(s).
RSG also found that the adoption of a redevelopment project area would also have a detrimental effect on
the City's General Fund. The City currently collects 25% of the property taxes with the subarea 8. If the
project area were established, the City would lose approximately $3.0 million over the 45-year life of the
project ($0.85 million in 'today's dollars) to the Redevelopment Agency , an amount equal to the
difference between the City's share of taxes without redevelopment and the amounts required by law to be
paid to the City' s General Fund if the area were a redevelopment project area.
ANALYSIS
RSG found that only one of the eight subareas studied as Part of the Redevelopment Feasibility Analysis
met the stringent legal requirements of blight as determined by California Redevelopment Law. Due to
the lack of size of the qualifying subarea (Scarlett Court), RSG has determined that the area would be
unable to generate sufficient tax increment revenues to meet the purpose and goals of establishing a
redevelopment agency. For those reasons, staff would concur with the RSG's findings and recommend
that the City Council take no further action on this matter.
RECOMMENDATION
It is staff's recommendation that the City Council receive the Rosenow Spevacek Group report and take
no further action.
Redevelopment Feasibility Study
January 26, 2000
City of Dublin
100 Civic Plaza
Dublin, Califomia 94568
Rosenow Spevacek Group, Inc.
540 North Golden Circle, Suite 305
Santa Ana, California 92705
Phone: (714) 541-4585
Fax: (714) 836-1748
E-Mail: RSGIncC^@aol.com
ATTACHI~IENT !
Redevelopment Feasibility Study
City of Dublin
Introduction ........................................................................ 1
Why Redevelopment is Being Considered ....................................... 2
Legal Requirements ............................................................ 3
Urbanization .......................................................................................... 4
Blighting Conditions. ........................................................................... 4
Blighting Conditions in Study Area ................................................... 6
Subarea 1 .................................................................................... 6
Subarea 2 .................................................................................... 8
Subarea 3 .................................................................................... 9
Subarea 4 .................................................................................. 11
Subarea 5 .................................................................................. 11
Subarea 6 ............................................................................ 13
Subarea 7 .................................................................................. 14
Subarea 8 .................................................................................. 15
Fiscal Implications .......................... ',,- ............................. 11
Tax Increment Projections ................................................................ 17
Economic Feasibility ........................................ · .................................. 23
Fiscal Impact on City's General Fund .............................................. 26
Conclusions ...................................................................... 29
C:\WlNDOWS\TEMP\STUDY2.DOC
Redevelopment Feasibility Study
City of Dublin
The City of Dublin ("City") is in the process of formulating three specific
plans to facilitate the continued economic viability of certain commercial
areas in the City. To implement these specific plans, the City is
investigating various financing mechanisms, including the creation of a
redevelopment project pursuant to the California Community
Redevelopment Law, Health and Safety Code Section 33000 et seq.
("Law"). The Law permits cities to adopt and implement redevelopment
plans by providing legal and financial tools to mitigate specific physical and
economic blighting conditions.
This redevelopment feasibility study ("Study") assesses the legal and
financial implications of formulating a redevelopment project area inclusive
of the three specific plan areas, and other commercial and industrial areas
in older sections of the City. The 273-acre redevelopment study area
("Study Area") includes the following 8 subareas:
· Specific Plan Areas:
l)
West Dublin BART Specific Plan Area, generally bounded by
Dublin Boulevard, Amador Plaza Road, Interstate 580 and San
Ramon Road
2)
Downtown Core Specific Plan Area, generally inclusive of the
Dublin Place Center and other commercial properties along
Amador Plaza Road, from Amador Valley Boulevard to Dublin
Boulevard.
3)
Village Parkway Specific Plan Area, generally inclusive of
properties immediately east and west of Village Parkway, between
Amador Valley Road and Dublin Boulevard.
· Other Study Areas:
4) Donlon Square Center, located on Dublin Boulevard at Donlon
Way.
Shamrock Village and Dublin Plaza centers along Amador Valley
Road and Regional Street.
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s) An unnamed neighborhood shopping center at San Ramon Road
and Alcosta Boulevard.
1) Various commercial properties along Dublin Boulevard, between
Sierra Court and Dougherty Road.
8)
Industrial and commercial properties generally bounded by Dublin
Boulevard, the Southern Pacific Railroad right-of-way, Interstate
580, and Scarlett Court
A map of the Study Area is included at the end of this Study as Exhibit A.
Why Redevelopment is Being 'Considered
Based on RSG's discussions with citY staff, a field inspection of the Study
Area and review of the economic opportunities in the area, redevelopment
is being considered to achieve three fundamental goals, as listed below:
To facilitate implementation of far,~,ade and streetscape improvements
through the West Dubin BART, Downtown Core and Village Parkway
Specific Plans
· To encourage the revitalization of Study Area properties to protect the
community's economic base
· To employ Iow and moderate income housing tax increment funds into
a Citywide housing rehabilitation program.
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Redevelopment Feasibility Study
City of Dublin
In 1945, the Community Redevelopment Act was enacted by the
California State Legislature to enable local governments to redevelop
urban areas, that for many reasons, have suffered from unsafe, unfit,
deteriorated, and economically dislocated buildings and properties. The
initial growth in redevelopment was slow with only 46 redevelopment
agencies established by 1965. Today, it is estimated that over 400
redevelopment agencies exist with approximately 780 project areas.
Redevelopment was traditionally intended for severe conditions of blight
such as that existing in inner city areas like Bunker Hill in' Los Angeles and
the Embarcadero area of San Francisco. Over the years, as
redevelopment became more popular, cities used redevelopment as a
funding mechanism in areas that did not meet the traditional views of
blight. In the 1970s and 1980s, many cities placed suburban and semi-
rural areas into redevelopment by arguing that these areas lacked public
infrastructure. A public backlash developed in the early 1990s resulting in
legislation that clarified the definition of blight. In 1993, the State
Legislature adopted the Community Redevelopment Law Reform Act (AB
1290); this legislation mandated findings of both physical and economic
blight.
Prior to AB 1290, a blighted area was characterized by one or more
conditions set forth in Health and Safety Code Sections 33031 and 33032,
causing a reduction of, or lack of, proper utilization of the area that it
constituted a physical, social, or economic burden on the community. The
definition of blight was so vague that it allowed project areas to be
characterized as blighted without the presence of substantial physical
deterioration.
Under AB 1290, the definition of blight was amended for project areas
adopted after January 1, 1994. As it exists today, Health and Safety Code
33031 provides that a blighted area must contain both physical and
economic blight. Specifically, the conditions set forth in Section 33031
must be so prevalent and substantial to cause a reduction of, or lack of,
proper utilization of the area to the extent that it constitutes a serious
physical and economic burden on the community. This burden cannot be
expected to be reversed or alleviated by private enterprise, governmental
action, or both, without redevelopment.
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The implications of AB 1290 cannot be overlooked; new project areas must conform
to a significantly higher threshold of blight and urbanization than what was previously
permitted by Law. Indeed, many project areas created prior to redevelopment reform
in 1994 could not meet today's legal requirements. As a result, it is much more
difficult to create a redevelopment project area under today's legal requirements.
Urbanization
Section 33320.1 of the Law mandates that not less than 80% of the land in
a redevelopment project area is urbanized. Urbanized properties are
defined as developed (or formerly developed) parcels, parcels of irregular
form under mixed ownership, and properties that are an integral part of an
urban area (i.e. substantially surrounded by developed property).
Applying these criteria to the Study Area, RSG determined that the Study
Area in fact exceeds the 80% urbanization threshold. RSG estimates that
approximately all 273 acres (100%) of the Study Area are urbanized,
because Study Area parcels are either developed, or an integral part of an
urban area, because they are surrounded by developed property on three
or more sides.
Blighting Conditions
Pursuant to Section 33320.1 of the Law, redevelopment project areas
must also be blighted. Indeed, the courts have found that the elimination
of blight is the public purpose that justifies the use of redevelopment tools,
including the expenditure of public funds, acquiring property, and imposing
land use controls. As defined by Section 33031 of the Law, blight
encompasses physical and economic conditions that cannot be alleviated
by private enterprise, governmental action or both, without redevelopment.
Section 33031 also provides defines these physical and economic
conditions as follows:
physical blight is defined as:
Buildings in which it is unsafe or unhealthy for persons to occupy, live,
or work. These conditions inclUde serious building code violations,
numerous structures that are dilapidated or severely deteriorated,
numerous structures that exhibit defective design or physical
construction, faulty or inadequate utilities, or other similar factors.
· Factors that prevent or substantially hinder the viable use or reuse of
buildings or lots. This condition can be caused by substandard
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REDEVELOPMENT FEASIBILITY STUDY
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building design, inadequate parcel size, nearby insufficient parking, or
other similar factors.
Adjacent or nearby uses that are incompatible with one another, and
prohibit the economic development of adjoining parcels
Lots subdivided into irregular shapes, and are inadequately sized for
proper usefulness and development. Further, these lots are. often
under multiple ownership.
Economic blight is defined as:
Depreciating or stagnant property values or impaired investments.
Properties whose value is impacted by hazardous wastes and
materials also fall under this category.
Abnormally high business vacancies, abnormally Iow lease rates, high
turnover rates, abandoned buildings, or excessive vacant lots within an
area developed for urban use and served by utilities.
The lack of commercial facilities that are normally found in
neighborhoods, including grocery stores, drug stores, and banks and
other lending institutionS.
Residential overcrowding or an excess of bars, liquor stores, or other
businesses that cater exclusively to adults and generate public safety
and welfare problems.
· A high crime rate that constitutes a seriOus threat to the public safety
and welfare.
In addition to the aforementioned conditions, inadequate public
infrastructure is also considered a condition of blight when other physical
conditions are present.
While the Law does not quantify the portion of the Project Area that should be
blighted, case law has generally found that blight must predominate and impact the
entire redevelopment project area. Further, the Agency cannot include property
solely for the purpose of collecting additional tax increment revenue; properties within
a redevelopment project area must be either blighted or necessary for effective
redevelopment of the project area.
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Blighting Conditions in Study Area
In November 1999, RSG conducted a windshield field inspection of the
Study Area, during which RSG noted examples of physical blighting
conditions and vacancies. In addition, RSG surveyed 10 real estate
professionals active in the Study Area (see list in Exhibit B), studied
ownership and parcel configurations obtained from the County Assessor's
office, obtained statistics on police calls for service, investigated the extent
of documented hazardous contamination, and interviewed City staff.
In aggregate, RSG estimates that approximately 15 parcels, or 10% of the
Study Area's 149 parcels, are characterized with one or more blighting
conditions. Examples of blighted properties were primarily concentrated in
Subarea 8, which is the Scarlett Court industrial area. In general, the
conditions noted within the Study Area include the following:
,~) Dilapidation and Deterioration1 specifiCally limited to certain industrial
properties along Scarlett Court in Subarea 8.
2)
Conditions hindering the economic viability of buildings and lots,
specifically limited to inadequate parking and obsolete structures in
Subarea 8.
3)
Potentially impaired investments due to history of hazardous
contamination, identified' on approximately 8 properties located in the
Study Area, including 2 in Subarea 8. (A list of properties with a history
of hazardous contamination is included on Exhibit C) Of the 8
properties identified, 6 are currently under remediation.
In order to prepare and adopt a redevelopment plan involving the Study Area,
blighting conditions would need to be further documented, along with a more
extensive analysis of their burden on the community and the inability of the private
sector or the City to alleviate these conditions without redevelopment.
RSG has described below any blighting Conditions within each Subarea:
Subarea 1
Subarea 1, which is coterminous with the proposed boundaries of the
West Dublin BART Specific Plan Area, encompasses retail, office, hotel
and industrial uses. With the development of the West Dublin BART
station at Golden Gate Drive, the City is looking to redevelop surrounding
properties with uses that compliment the new transit center development.
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Physical Conditions:
· The Law establishes somewhat high thresholds of what constitutes
physical blight. Overall, properties in Subarea 1 are in sound
condition and cannot be described as dilapidated or deteriorated.
City Code Enforcement did not identify any serious code violations
in this Subarea, or any other portions of the Study Area. While
some of the 20-30 year old structures within this area would appear
to benefit from a facelift to modernize their appearance, this
circumstance alone does not justify redevelopment.
Many properties within this area have been, or are planned to be,
privately redeveloped. Examples include a proposed 42,000
square foot office complex addition on the corner of Dublin
Boulevard and San Ramon Road, a successful facade
improvement of a commercial center at 7884 Dublin Boulevard, the
Outback Steakhouse restaurant, and the $60 million BART Project
at Golden Gate Drive. These circumstances provide ample
evidence that private enterprise can undertake revitalization efforts
without redevelopment.
· There were no examples of incompatible uses that prohibited the
economic development of this area, nor any evidence of lots of
irregular shape, form, and size under multiple ownership.
Economic Conditions:
· RSG's field survey did not identify any examples of high turnover or
vacancies within Subarea 1, and property lease rates in this area
average $1.25 per square foot (triple net) for retail property and
$1.95 per square foot for office property, rates which local brokers
characterized as typical of the Tri-Valley area. (See Exhibit D for a
summary of RSG's lease rate survey)
There was no evidence of high business turnovers in Subarea 1;
while data was not available to analyze property value specifically
within the Study Area, RSG believes that property values are
comparable to other Tri-Valley properties.
Research of the California Environmental Protection Agency's
(EPA) listing of known contaminated sites did not identify any
contaminated properties in Subarea 1; neither property
representatives nor RSG could identify other examples of impaired
ownership in this area.
· The area does not contain residential uses, so there was no
evidence of residential overcrowding.
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· The area does not contain a concentration of businesses that cater
exclusively to adults, such as adult businesses and bars.
· Finally, both analysis of Sheriff department statistics and follow-up
discussions with police services staff indicate that the Study Area,
like the balance of the City, does not suffer from high crime rates.
,
In light of the absence of any indications of blight, it is RSG's conclusion
that Subarea 1 does not qualify for inclusion in a redevelopment project
area.
Subarea 2
Subarea 2 incorporates the Downtown Core Specific Plan Area along
Amador Plaza Road. One of staffs initial concerns about this area was
that the mixed ownership of the Dublin Place Center seemed to inhibit
efforts to create a contemporary uniform design for the entire center.
Physical Conditions:
· The field survey did not note any examples of serious structural
problems in this Subarea. Some of the facades were tired, but this
condition did not appear to affect the ability of businesses to remain
in place.
The tenants are quality, national tenants that have not indicated
any intention to relocate from the area. City staff reports that Home
Depot has plans to construct a 95,000 square foot EXPO Design
Center on the vacant parcel between the Montgomery Wards and
Target buildings.
Parking at properties along Amador Plaza Road, while somewhat
banal in character, appeared to supply sufficient capacity for the
businesses in the area
Buildings at the Dublin PlaCe Center are poorly laid out and the
entire center suffers from a disjointed site plan. These conditions
are apparently caused in part by the fact that ownership of the 7
parcels that comprise the center is divided among 5 different
entities.
· There was no evidence of incompatible uses in this retail district.
Economic Conditions:
· With the entrance of Home Depot's EXPO Design Center into this
area, there are no examples of substantial vacancies, high
business turnover rates, or abnormally Iow lease rates in the area.
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(Although a few retail vacancies were noted at the Dublin Place
Center during the field survey, follow up conversations with retail
brokers indicated that many of these spaces had been since
leased) RSG's survey of commercial brokers indicates that the
area commands retail rents of approximately $1.00 - $1.30 per
square foot, which brokers considered to be average for larger
shopping districts in the Tri-Valley area.
· Only one property within the area (Montgomery Wards Auto
Center) had a record of contamination according to California EPA.
However, this sole occurrence does not appear to impair the
utilization of this or surrounding parcels.
· The area does not contain residential uses, so there was no
evidence of residential overcrowding.
The area does not contain a concentration of businesses that cater
exclusively to adults, such as adult businesses and bars.
Again, the Study Area overall does not include what the City's
Police Services department would consider to be high crime areas.
While Subarea 2 would benefit from a consolidated revitalization effort to
update facades and streetscape to today's standards, it is RSG's
conclusion that this condition alone does not qualify the area for inclusion
in a redevelopment project.
Subarea 3
Subarea 3 contains a mix of office, auto, and retail uses along Village
Parkway. City staff indicates that land uses and lot configurations along
Village Parkway cause an excessive reliance on automobiles for patrons.
The City is seeking tools to work with the area's ·multiple owners to
address erratic land use patterns by transitioning the area into a
pedestrian-oriented retail district.
Physical Conditions:
· While RSG did not identify properties with serious structural
conditions, several properties along Village Parkway, including the
strip center a the northwest corner of Village Parkway and Amador
Valley Boulevard, would benefit from repainting, updated fac~ade
treatments, and improved signage.
Access between parcels was difficult, because many properties did
not permit vehicular movement without using Village Parkway.
This condition was observed at parcels northeast of the intersection
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REDEVELOPMENT FEASIBILITY STUDY
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of Dublin Boulevard and Village Parkway, as well as properties
west of Village Parkway.
Some properties contained a mix of industrial, auto service and
commercial uses on the same site. Lots where these situations
existed appeared to be overcrowded, lacking parking, onsite
landscaping and trash enclosures. Examples include 6842 Village'
Parkway and 7080 Village Parkway. However, these problems are
evidently isolated and not detrimental to the overall character of this
district. According to City staff, this area has not been frequently
cited by code enforcement.
Economic Conditions:
· Based on RSG's discussions with real estate representatives
familiar with Subarea 3, lease rates in this area remain relatively
high. Retail properties lease rates range from $1.25 to $2.00 per
square foot, which is comparable to rents for space of this type in
the Tri-Valley area.
RSG did not observe a particularly high concentration of vacancies
in Subarea 3. Brokers also commented that the area is desirable
and does not suffer from high business turnovers or stagnant
property values. The strip center on the northwest corner of
Amador Valley Boulevard and Village Parkway had 2 of 8 spaces
vacant in November 1999. ElseWhere in Subarea 3, commercial
space was generally filled.
Automotive uses in Subarea 3 have been found by California EPA
as having onsite contamination, including properties at 7249 Village
Parkway, 7197 Village Parkway, and 9194 Village Parkway. The
extent of the identified contamination has not been fully
investigated, and additional research may be warranted to
determine the extent of this problem and the willingness of the
principals to undertake remediation.
· The area does not contain residential uses, so there was no
evidence of residential overcrowding.
· The area does not contain a concentration of businesses that cater
exclusively to adults, such as adult businesses and bars.
· Again, high crime rates were not a factor throughout the Study
Area.
While Subarea 3 does have some physical blighting conditions, it does not
meet the Law's requirements that project areas contain both physical and
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economic blight. The apparent absence of economic factors, such as high
vacancy rates, abnormally Iow property values or Iow lease rates, would
prohibit the City from including this area in a redevelopment project area at
this time.
Subarea 4
The Donlon Square Center comprises Subarea 4. The 40,000 square foot
shopping center is anchored by a building supply store.
Physical Conditions:
· Like many of the retail buildings in the Study Area, the Donlon
Square Center needs a minor faceliff to modernize the fac~ade.
However, the overall structural condition of the property .appeared
sound.
The entire shopping center lies on a single parcel with adequate
parking, although onsite landscaping could improve the aesthetic
character of the property.
· RSG did not observe any conditions that caused the property to be
incompatible with surrounding uses.
Economic Conditions:
· The retail space was fully occupied at the time of the field
inspection, and there were no apparent economic conditions that
impaired investment.
· The area does not contain residential uses, so there was no
evidence of residential, overcrowding.
· The area does not contain a concentration of businesses that cater
exClusively to adults, such as adult businesses and bars.
Local brokers did not believe that this area suffered from
particularly high business turnover rates or stagnant property
values.
· EPA did not identify any contaminated sites within Subarea 4.
Subarea 4 does not contain any of the blighting conditions as prescribed
by Law that would qualify its incluSion in a redevelopment project area.
Subarea 5
Subarea 5 includes retail and office uses along Regional Street, San
Ramon Road, and Amador Valley Boulevard. Two 30-year old retail
ROSENOW SPEVACEK GROUP, INC. PAGE 11
REDEVELOPMENT FEASIBILITY STUDY
CITY OF DUBLIN
centers anchor the district, including the 51,200 square foot Shamrock
Village center and the 191,900 square foot Dublin Plaza center.
Physical Conditions:
· As relatively older retail centers, Shamrock Village and Dublin
Plaza do not feature contemporary facades and on site
improvements found in today's retail developments. However,
RSG observed that these centers and other structures in this
Subarea are of generally sound COndition.
Parking and access appeared to be adequate, with the exception of
the 50,900 square foot Almond Plaza center at 7180 Regional
Street. This center's u-shaped design and somewhat high lot
coverage (approximately 26%) caused the center to be somewhat
more congested than nearby properties. However, the center's
poor physical layout did not appear to hinder the economically
viable use of the center; given the high occupancy'rates of this
development, the center seemed to be quite viable for continued
commercial use.
· RSG did not observe any conditions that caused the property to be
incompatible with surrounding uses.
· Parcels in Subarea 5 are not of irregular form, shape and size, so
this blighting condition cannot be documented in this area.
Economic Conditions:
· Only a few vacancies were observed during the field inspection,
including a closed fast food restaurant at 7122 Regional Street.
Follow-up phone calls with area brokers indicated that spaces in
this area typically do not stay vacant for more than 60 days.
Rents are generally competitive with similar space in the Tri-Valley
Area. Dublin Plaza Center leases for $1.10 per square foot, which
is not abnormally Iow for the retail centers of that age and design in
the area. Other retail properties in the area lease for as much as
$1.75 per square foot.
Only one property had any record of contamination in Subarea 5.
This service station at 7007 San Ramon Road is currently
processing a site work plan for remediation acCOrding the California
EPA.
Subarea 5 contained only two small vacant lots, which cannot be
characterized as excessive and therefore blighted under the Law.
Also, there were no signs or indications from brokers that the area
ROSENOVV SPEVACEK GROUP, INC. PAGE 12
REDEVELOPMENT FEASIBILITY STUDY
CITY Of DUBLIN
suffered from high business turnover rates, stagnant property
values, or a lack of commercial facilities.
· The area does not contain residential uses, so there was no
evidence of residential overcrowding.
· The area does not contain a concentration of businesses that cater
exclusively to adults, such as adult businesses and bars.
· Subarea 5 is not considered a high crime area by the Sheriff's
department.
RSG could not identify serious blighting conditions in Subarea 5 to
recommend its inclusion in a redevelopment project area at this time.
Subarea 6
Subarea 6 includes a small neighborhood shopping center constructed in
about 1970. The former anchor tenant, a Lucky grocery store, shuttered
its location a few years ago in favor of a newer center nearby. The
grocery space is currently occupied by a furniture store. The City is
considering including this area in a redevelopment project area to facilitate
the rejuvenation of this center.
Physical Conditions:
· The la,de and signage of this development are obsolete by
today's standards. Renovating the entire center may be complex,
since the center's ownership is split between three different parties.
Also, since Lucky Stores is retaining ownership of the former
grocery space, they may not be motivated in investing into a center
in which they no longer operate a store.
RSG estimates that the center is approximately 50,000 square feet
in size, which is about half of the size of today's neighborhood
shopping centers. Because of its small size, attracting and
retaining anchor tenants may be difficult in the future if the space is
vacated. However, the center's property representative indicates
that center benefits from its location to the nearby retail center
across Alcosta Boulevard in San Ramon. Demonstration of
substandard design, as defined by Law, is difficult in this instar]ce
since the center is currently occupied and in generally sound
condition.
Parking at the center was not considered to be inadequate; there
were a number of unused parking stalls observed during the field
survey.
ROSENOVV'SPEVACEK GROUP, INC. PAGE 13
REDEVELOPMENT FEASIBILITY STUDY
CITY OF DUBLIN
· The neighborhood shopping center is compatible with surrounding
commercial and residential uses.
· No other physical conditions were noted in the field survey.
Economic Conditions:
· Two of the eight spaces in the center were vacant at the time of the
field survey; these vacancies amounted to approximately 10% of
the entire area of the center.
Property representatives indicated that the center lease rates are
comparable to other spaces in Dublin, ranging from $1.25 to $1.50
per square foot.
Subarea 6 has no vacant lots, nor any evidence of high business
turnover rates, stagnant property values, or a lack of commercial
facilities.
· The area does not contain residential uses, so there was no
evidence of residential overcrowding.
The area does not contain a concentration of businesses that cater
exclusively to adults, such as adult businesses and bars.
RSG's research of other economic blighting factors found that this
Subarea does not suffer from high crime or hazardous
contamination.
Although the center is generally in sound condition and well occupied, the
Lucky's closure, lack of modernization, and dated design suggest this
property may be in decline. However, because these conditions have not
yet led to a consistent pattern of failures, declining lease rates, or
vacancies, RSG does not recommend including Subarea 6 in a
redevelopment project area.
Subarea 7
Subarea 7 includes industrial and retail properties along the north side of
Dublin Boulevard, from Sierra Court to Dougherty Road. This area was
studied because the 104,000 square foot retail discount store on the
corner of Dublin Boulevard and Dougherty Road appeared to need facade
improvements.
Physical Conditions:
· Properties along Dublin Boulevard were of mixed character,
featuring inconsistent uses and design for this gateway to the
ROSENOW SPEVACEK GROUP, INC. PAGE 14
REDEVELOPMENT FEASIBILITY STUDY
CITY OF DUBLIN
community. Overall, though, the buildings in the area appeared to
be structurally sound.
Multiple ownership of commercial properties immediately northeast
of the intersection of Dublin Boulevard and Sierra Court was
evident, a condition which could inhibit use of these properties. At
the. time of the field inspection, though, RSG did not note any
vacancies or serious nuisances that were created as a result of the
configuration of parcels and ownership in this area.
· No other physical conditions were noted in the field survey.
Economic Conditions:
· The entire Subarea 7 appeared to be fully leased, and brokers
commented that the area commands relatively high lease rates
($1.40 to $1.45 per square foot). The high rents are attributed to
the utilization of this industrial space for office/service uses.
There was no evidence of impaired investments in the area,
although one property (6401 Dublin Boulevard) was identified as
having hazardous contamination by California EPA. However,
California EPA reports that remediation efforts are underway.
· The area does not contain residential uses, so there was no
evidence of residential overcrowding..
· The area does not contain a concentration of businesses that cater
exclusively to adults, such as adult businesses, and bars.
Subarea 7 does not contain sufficient examples of physical and economic
blight necessary to recommend its inclusion in a redevelopment project
area at this time.
Subarea 8
Subarea 8 contains approximately 15 blighted parcels, including older
industrial and automotive uses along Scarlett Court. City staff has
indicated that the inclusion of this 21-parcel area in a redevelopment
project area is desired to facilitate recycling and cleanup of some of the
obsolete uses and upgrade this gateway to the City.
Physical Conditions:
· Structural deterioration was evident on four properties along
Scarlett Court. Conditions noted included deferred maintenance,
deteriorated facades, and minor exterior damage.
ROSENOVV SPEVACEK GROUP, INC, PAGE 15
REDEVELOPMENT FEASIBILITY STUDY
CITY OF DUBLIN
Some properties suffered from poorly configured lots that lacked
sufficient space for onsite parking and loading/unloading activities,
including a multi-tenant auto service use immediately southwest of
Scarlett Court. ASa result, the street was cluttered with vehicles
that inhibited traffic flows.
Another condition noted was the unscreened storage of wood and
debris along Dublin Boulevard. Open storage of this material was
clearly visible from Dublin Boulevard and adjoining hotel and
commercial uses. City staff reports that this condition is a nuisance
to surrounding property owners.
Economic Conditions:
· The majority of this area is owner occupied, so lease rate
information was not available. Discussions with local real estate
brokers indicated that the area is prime for revitalization as
surrounding areas develop.
Due to its proximity to Interstate 580, the East Dublin BART station,
and appreciating east Dublin properties, property values in this
area are relatively high, ranging from $15 to $25 per square foot. It
is likely that an acquisition and redevelopment program could be
costly.
Hazardous contamination was documented on two parcels within
the Survey Area; several brokers expressed concerns that
additional contamination could be identified, as older industrial
properties are recycled.
Subarea 8 contains both physical and economic conditions that meet the
basis for proceeding with a redevelopment project. However, because of
its small size and lack of redevelopment potential, implementation of a
redevelopment program in this area alone is not believed to be
economically viable. The economic feasibility of redevelopment in the
Study Area is discussed in the next section.
ROSENOVV SPEVACEK GROUP, INC. PAGE 16
Redevelopment Feasibility Study
City of Dublin
The successful implementation of most redevelopment programs will
require a significant amount of capital. Redevelopment is traditionally
funded through tax increment financing. Redevelopment agencies do not
have the authority to raise taxes or impose new assessments. Instead,
tax increment financing allows for a redistribution of future property tax
revenue to a redevelopment agency.
Tax increment revenue is property tax revenue generated by increases in
assessed values over an established base year value. When a
redevelopment project area is established, the county auditor-controller
sums up the existing value of all properties within the project area; this
value is called the base year value. As subsequent year assessed values
within the project area increase due to the reassessments provided for by
Proposition 13 (property improvements and/or sales, and an up to 2%
inflation adjustment), the resulting property tax revenue generated from
this incremental increase in assessed value over the base year value is
allocated to a redevelopment agency to fund redevelopment activities.
The chart below graphically depicts how tax increment is generated.
TAX INCREMENT FINANCING
Redevelopment
Project Area Created
Tax Base Value Set
New Private ~
Investment ~
I .I, ~ In c~:luS;tiAoSnS; :~ e d
· ~...---r~ I ..d.v.,o.me.t
Start Project I 0 20 30 40
Redevelopment
Project Period
C ° m P leted~~I
I Increase In Assessed
· Valuation Accrues to
Other Agencies
·
_
50 ~
YEARS
ROSENOW SPEVACEK GROUP, INC. PAGE 17
REDEVELOPMENT FEASIBILITY STUDY
CITY OF DUBLIN
The underlying philosophy of tax increment financing is that without
redevelopment, property tax revenues within a redevelopment project area
would remain generally fiat or even decline. However, when
redevelopment powers are utilized in a proactive mode, such actions
should result in an increase in property values.
VVhen a redevelopment program and project area are established, all of
the property tax revenues generated from any future increase in the
assessed value of properties is allocated to the redevelopment agency.
Upon receipt, an agency is statutorily required to: 1) deposit 20% of the
tax increment revenue into a Iow and moderate income housing fund in
order to improve and expand the community's supply of affordable
housing, and 2) remit statutory payments to each of the taxing agencies
who collect property taxes from the project area. With respect to the latter,
a legally prescribed formula is established that calls for payments equal to
25% of the remaining 80% nonhousing tax increment revenue during the
first ten years of a redevelopment project. Beginning in the 11th year and
again in the 31st year of a redevelopment project, these amounts increase
pursuant to a statutory formula. In general, over the 45-year time period
that a redevelopment agency may collect tax increment revenue, $0.31 of
every $1.00 of tax increment revenue is allocated to affected taxing
agencies; the redevelopment agency retains $0.20 for affordable housing
programs and $0.49 for nonhousing programs.
The chart below depicts the disposition of the three primary ways tax
increment revenue is distributed.
Disposition of Tax Increment Revenues
Agency
Nonhousing
Fund Revenue
49%
Statutory
Payments (to
Affected Taxing
t Agencies)
31%
'n~l~gency Housing
- Fund Revenue
20%
AB 1290, adopted in 1993, changed the CRL by imposing upon
redevelopment project areas new limits and financing provisions, as well
as requiring mandatory pass throughs of tax increment to affected taxing
ROSENOW SPEVACEK GROUP, INC. PAGE 18
REDEVELOPMENT FEASIBILITY STUDY
CITY OF DUBLIN
agencies. In general, these new provisions have had a somewhat
negative impact on the financial feasibility of new redevelopment project
areas. Two provisions that have the greatest financial impact on new
project area formations are: (1) the 20 year time limit on incurring
(nonhousing fund) debt, and (2) the provision for mandatory tax increment
pass throughs. The mandatory pass through provision allocates
approximately 31% of all tax increment generated from a project area over
the 45 year term for collecting tax increment to its taxing agencies. These
funds are passed through to the affected taxing agencies (excluding the
City) on a formula basis specified in the CRL that increases the
percentage allocated to the taxing agencies over time. The second
provision limiting the amount of time an agency has to incur debt severely
limits the dollars available to invest in the redevelopment of a project area,
particularly as it relates to bonding capacity. These limits can be extended
through the amendment of a redevelopment plan. However, an
amendment of this type would require the resubstantiation of blight.
Tax Increment Projections
Tables 1-A and 1-B presents tax increment revenue projections for those
portions Of the Study Area that contain sufficient blighting conditions to
proceed 'with a project area formatiOn, specifically Subarea 8 (Scarlett
Court). These projections incorporate the following assumptions as
summarized below:
t)
1999-00 Base Year Value: The base year value is established by the
Alameda County Auditor-Controller. If the City completes the 9-12
month process to adopt a redevelopment plan by July 20, 2001, the
base year value of the Study Area would be based on the 2000-01
equalized assessment roll, and begin collecting property tax increment
revenue in fiscal year 2002-03. RSG estimated the base year value
using the 1999-00 secured assessment roll, and the annual 2%
inflationary adjustment permitted by Proposition 13. No unsecured or
nonunitary utility values were included in the base year values.
Assessed Value Growth Rates: RSG applied a conservative 2%
assessed value growth rate to estimate future assessed values.
3)
Development Potential: RSG incorporated certain development
assumptions into the tax increment forecast to account for
development and redevelopment of vacant and underutilized
properties in the Study Area over the 45 year period the
Redevelopment Agency could collect tax increment revenue. As
shown on Tables 2a and 2b, the projects incorporated into the forecast
were based on consultations with City staff.
ROSENOWSPEVACEK GROUP, INC.
PAGE 19
REDEVELOPMENT FEASIBILITY STUDY
CITY OF DUBLIN
Projected Tax Increment Revenues - Subarea 8 Only (No Office Reuse)
TABLE I-A
Year
New
Development Total Assessed Gross Tax
(Per Table 2a) Value Increment
1999-00 23,380,454
Base 2000-01 23,965,000
1 2001-02 24,565,000
2 2002-03 2,100,000 27,280,000 33,150
3 2003-04 3,000,000 30,960,000 69,950
4 2004-05 2,500,000 34,235,000 102,700
5 2005-06 35,090,000 111,250
6 2006-07 35,965,000 120,000
7 2007-08 36,865,000 129,000
8 2008-09 37,785,000 138,200
9 2009-10 38,730,000 147,650
10 2010-11 39,700,000 157,350
11 2011-12 40,695,000 167,300
12 2012-13 41,710,000 177,450
13 2013-14 42,755,000 187,900
14 2014-15 43,825,000 198,600
15 2015-16 44,920,000 209,550
16 2016-17 46,045,000 220,800
17 2017-18 47,195,000 232,300
18 2018-19 48,375,000 244,100
19 2019-20 49,585,000 256,200
20 2020-21 50,825,000 268,600
21 2021-22 52,095,000 281,300
22 2022-23 53,395,000 294,300
23 2023-24 54,730,000 307,650
24 2024-25 56,100,000 321,350
25 2025-26 57,500,000 335,350
26 2026-27 58,935,000 349,700
27 2027-28 60,410,000 364,450
28 2028-29 61,920,000 379,550
29 2029-30 63,470,000 395,050
30 2030-31 65,055,000 410,900
31 2031-32 66,680,000 427,150
32 2032-33 68,345,000 443,800
33 2033-34 70,055,000 460,900
34 2034-35 71,805,000 478,400
35 2035-36 73,600,000 496,350
36 2036-37 75,440,000 514,750
37 2037-38 77,325,000 533,600
38 2038-39 79,260,000 552,950
39 2039-40 81,240,000 572,750
40 2040-41 83,270,000 593,050
41 2041-42 85,350,000 613,850
42 2042-43 87,485,000 635,200
43 2043-44 89,670,000 657,050
44 2044-45 91,910,000 679,450
45 2045-46 94,210,000 702,450
Statutory
Payments to Housing Nonhousing
Taxing Fund Fund
Entities Revenue Revenue
Total to
Agency
6,630 6,630 19,890 26,520
13,990 13,990 41,970 55,960
20,540 20,540 61,620 82,160
22,250 22,250 66,750 89,000
24,000 24,000 72,000 96,000
25,800 25,800 77,400 103,200
27,640 27,640 82,920 110,560
29,530 29,530 88,590 118,120
31,470 31,470 94,410 125,880
33,460 33,460 100,380 133,840
37,195 35,490 104,765 140,255
41,041 37,580 109,279 146,859
44,978 39,720 113,902 153,622
49,008 41,910 118,632 160,542
53,148 44,160 123,492 167,652
57,380 46,460 128,460 174,920
61,722 48,820 133,558 182,378
66,175 51,240 138,785 190,025
70,738 53,720 144,142 197,862
75,412 56,260 149,628 205,888
80,196 58,860 155,244 214,104
85,109 61,530 161,011 222,541
90,150 64,270 166,930 231,200
95,302 67,070 172,978 240,048
100,583 69,940 179,177 249,117
106,011 72,890 185,549 258,439
111,568 75,910 192,072 267,982
117,272 79,010 198,768 277,778
123,105 82,180 205,615 287,795
129,085 85,430 212,635 298,065
137,077 88,760 217,963 306,723
145,285 92,180 223,435 315,615
153,685 95,680 229,035 324,715
162,301 99,270 234,779 334,049
171,133 102,950 240,667 343,617
180,181 106,720 246,699 353,419
189,469 110,590 252,891 363,481
198,973 114,550 259,227 373,777
208,717 118,610 265,723 384,333
218,701 122,770 272,379 395,149
228,949 127,040 279,211 406,251
239,437 131,410. 286,203 417,613
250,189 135,890 293,371 429,261
261,229 140,490 300,731 441,221
Cumulative
NPV at 5%
14,973,350 4,575,813 2,994,670 7,402,867 10,397,537
4,213,929 1,157,340 842,786 2,213,804 3,056,590
ROSENOVV SPEVACEK GROUP, INC. PAGE 20
REDEVELOPMENT FEASIBILITY STUDY
CITY OF DUBLIN
Projected Tax Increment Revenues - Subarea 8 Only TABLE I-B
Inclusive of Pro-active Redevelopment and Reuse for Office Development
New Statutory
Development Total Payments to Nonhousing
(Per Table Assessed Incremental Gross Tax Taxing Housing Fund Fund Total to
Year 2b) Value Value Increment Entities Revenue Revenue Agency
1999-00 0 23,380;454
Base 2000-01 23,965,000
1 2001-02 24,565,000
2 2002-03 2,100,000 27,280,000 3,315,000 33,150
3 2003-04 3,000,000~ 30,960,000 6,995,000 69,950
4 2004-05 2,500,000 34,235,000 10,270,000 102,700
5 2005-06 79,600,000 114,690,000 90,725,000 907,250
6 2006-07
7 2007-08
8 2008-09
9 2009-10
10 2010-11
11 2011-12
12 2012-13
13 2013-14
14 2014-15
15 2015-16
16 2016-17
17 2017-18
18 2018-19
19 2019-20
2O 2020-21
21 2021-22
22 2022-23
23 2023-24 ·
24 2024-25
25 2025-26
26 2O26-27
27 2027-28
28 2028-29
29 2029-30
30 2030-31
31 2031-32
32 2O32-33
33 2033-34
34 2034-35
35 2035-36
36 2036-37
37 2O37-38
38 2038-39
39 2039-40
4O 2040-41
41 2041-42
42 2042-43
43 2043-44
44 2044-45
45 2045-46
6,630
13,990
20,540
181,450
117,555,000 93,590,000 935,900 187,180
120,495,000 96,530,000 965,300 193,060
123,505,000 99,540,000 995,400 199,080
126,595,000 102,630,000 1,026,300 205,260
129,760,000 105,795,000 1,057,950 211,590
133,005,000 109,040,000 1,090,400 218,080
136,330,000 112,365,000 1,123,650 230,316
139,740,000 115,775,000 1,157,750 242,865
143,235,000 119,270,000 1,192,700 255,726
146,815,000 122,850,000 1,228,500 268,901
150,485,000 126,520,000 1,265,200 282,406
154,245,000 130,280,000 1,302,800 296,243
158,100,000 134,135,000 1,341,350 310,430
162,055,000 138,090,000 1,380,900 324,984
166,105,000 142,140,000 1,421,400 339,888
170,260,000 146,295,000 1,462,950 355,178
174,515,000 150,550,000 1,505,500 370,837
178,880,000 154,915,000 1,549,150 386,900
183,350,000 159,385,000 1,593,850' 403,350
187,935,000 163,970,000 1,639,700 420,222
192,635,000 168,670,000 1,686,700 437,518
197,450,000 173,485,000 1,734,850 455,238
202,385,000 178,420,000 1,784,200 473,398
207,445,000 183,480,000 1,834,800 492,019
212,630,000 188,665,000 1,886,650 511,100
217,945,000 193,980,000 1,939,800 530,659
223,395,000 199,430,000 1,994,300 556,819
228,980,000 205,015,000 2,050,150 583,627
234,705,000 210,740,000 2,107,400 611,107
240,575,000 216,610,000 2,166,100 639,283
246,590,000 222,625,000 2,226,250 668,155
252,755,000 228,790,000 2,287,900 697,747
259,075,000 235,110,000 2,351,100 728,083
265,550,000 241,585,000 2,415,850 759,163
272,190,000 248,225,000 2,482,250 791,035
278,995,000 255,030,000 2,550,300 823,699
285,970,000 262,005,000 2,620,050 857,179
293,120,000 269,155,000 2,691,550 891,499
300,450,000 276,485,000 2,764,850 926,683
307,960,000 283,995,000 2,839,950 962,731
6,630 19,890 26,520
13,990 41,970 55,960
20,540 61,620 82,160
181,450 544,350 725,800
187,180 561,540 748,720
193,060 579,180 772,240
199,080 597,240 796,320
205,260 615,780 821,040
211,590 634,770 846,360
218,080 654,240 872,320
224,730 668,604 893,334
231,550 683,335 914,885
238,540 698,434 936,974
245,700 713,899 959,599
253,040 729,754 982,794
260,560 745,997 1,006,557
268,270 762,650 1,030,920
276,180 779,736 1,055,916
284,280 797,232 1,081,512
292,590 815,182 1,107,772
301,100 833,563 1,134,663
309,830 852,420 1,162,250
318,770 871,730 1,190,500
327,940 891,538 1,219,478
337,340 911,842 1,249,182
346,970 932,642 1,279,612
356,840 953,962 1,310,802
366,960 975,821 1,342,781
377,330 998,220 1,375,550
387,960 1,021,181 1,409,141
398,860 1,038,621 1,437,481
410,030 1,056,493 1,466,523
421,480 1,074,813 1,496,293
433,220 1,093,597 1,526,817
445,250 1,112,845 1,558,095
457,580 1,132,573 1,590,153
470,220 1,152,797 1,623,017
483,170 1,173,517 1,656,687
496,450 1,194,765 1,691,215
510,060 1,216,541 1,726,601
524,010 1,238,861 1,762,871
538,310 1,261,741 1,800,051
552,970 1,285,197 1,838,167
567,990 1,309,229 1,877,219
Cumulative 70,764,700 19,321,852 14,152,940 37,289,908 51,442,848
NPV at 5% 21,478,199 5,323,896 4,295,640 11,858,663 16,154,303
ROSENOVV SPEVACEK GROUP, INC. PAGE 21
REDEVELOPMENT FEASIBILITY STUDY
CITY OF DUBLIN
Development Assumptions used in Tax Increment Projections
TABLE 2-A
Inflation
Assumed Year Building SF or Value/SF Adjustment Total Project
Subarea Location Development Completed Units or Unit 1/ Value
8 ScarlettDrive Auto Sales 2001 19,500 $ 108 1.02 $ 2,100,000
8 ScarlettDrive Auto Sales 2002 27,000 $ 108 1.04 $ 3,000,000
8 ScarlettDrive Retail/Motorcycles 2003 21,500 $ 108 1.06 $ 2,500,000
._Option...al._Developmen._t-R_.ed...eve/op._ment._of_.Giv_.en._Prope....~ie_.s ........ TABLE 2-a
8 Scarlett Court, Office Reuse of 2004 490,000 $ 150 1.08 $ 79,600,000
west of Scarlett Industrial Properties
Drive along Scarlett Court
1/ Assumes 2.0% annual inflationary increase in building costs
Based on these assumptions, RSG estimates that Subarea 8 would
generate a modest amount of tax increment revenue over the 45-year
collection period provided by Law. Cumulatively, RSG estimates per
Table l-A, that the Agency would generate approximately $15 million in
gross tax increment revenue over the duration of the Plan to fund
mandated housing set aside depoSits, statutory payments to affected
taxing agencies, and nonhousing programs. Based upon Table 1-B which
includes the assumption of a proactive redevelopment effort that would
produce a large office development, the Agency would generate
,approximately $70.7 million in gross revenues.
The Law.requires that not less than 20% of this tax increment revenue, or
$3.0 million and $14.1 million, respectively, be deposited into the Agency's
Iow and moderate income housing fund. Also, the Law stipulates that
another portion (approximately $4.6 million, and $19.2 million,
respectively) of the tax increment revenue is to be distributed to the
affected taxing agencies for statutory pass through payments. The
remaining tax increment revenue of $7.4 million and $37.3 million,
respectively, would be available to fund nonhousing programs within the
redevelopment project area over the 45 year term of collection. In
today's dollars, assuming a 5% discount rate, the net present value of the
projected Study Area housing resources equal $0.8 million or $4.3 million,
while the nonhousing revenues equal $2.2 million or $11.9 million,
respectively.
ROSENOW SPEVACEK GROUP, INC. PAGE 22
REDEVELOPMENT FEASIBILITY STUDY
CITY OF DUBLIN
Adoption and Administrative Costs
The City should also consider the costs involved in forming a
redevelopment project area. The redevelopment plan adoption process
entails environmental review, redevelopment document preparation, legal
counsel participation, and substantial public noticing and public hearings.
Without legal challenges, the costs to form a redevelopment project area
can range from $200,000 to $300,000. If the plan adoption is challenged,
these costs could be doubled.
Finally, the operation of the Agency must also be considered. By Law, the
Agency will need to complete an audit and various annual reports, adopt
implementation and housing plans, and administer tax increment funds.
RSG's experience indicates that these costs could average between
$50,000 to $200,000 annually. Over 45 years, the Agency could incur as
much as $1.5 million (in today's dollars) in annual administratiVe costs.
Available Funding for Nonhousing Projects
As a result of the $1.8 million of upfront adoption costs and ongoing
administrative costs, the Agency's ultimate nonhousing funding available
for project implementation costs would be reduced. In today's dollars, the
Agency available nonhousing funds would equal approximately $0.4
million without the development of an office project along Scarlett Drive, or
$10.1 million with the Scarlett project.
Economic Feasibility
RSG assessed the economic feasibility of a redevelopment project area
without and with redevelopment of a hypothetical office project along
Scarlett Court, west of Scarlett Drive. (An office reuse was assumed given
the fact that similar uses are in demand to the east and is considered to be
the highest and best use of this property.) Revenue projections without
and with the office project are presented on Tables 1-A and l-B,
respectively. As shown in these two forecasts, the office project would
generate significantly more tax increment revenue for Agency nonhousing
projects.
However. while an office project would increase the secured assessed
value of the project area by approximately $79.6 million and increase the
present value of the nonhousing property tax revenues (net of adoption
and administrative costs) from $0.4 million to $10.1 million, the Agency
would need to participate in the redevelopment of about 10 Scarlett Court
parcels in order to assemble, consolidate, and write-down the costs of the
land.
ROSENOVV SPEVACEK GROUP, INC. PAGE 23
REDEVELOPMENT FEASIBILITY STUDY
CITY OF DUBLIN
Costs to Implement Office Project
In order to accomplish a project of this scale, a total of $30.9 million of
acquisition, relocation, and other costs would need to be financed upfront.
(Table 3 presents estimates of the potential costs to acquire and
consolidate the Scarlett Court site.) This cost is approximately twice as
much as the land is worth on the open market. Since the Agency would
not have these funds available, this cost would need to be advanced by
the City General Fund, or some other source.
The $30.9 million project advance would be paid, in part, by land sales
proceeds and Agency nonhousing funds. These two sources would
account for approximately $25.8 million, including sales proceeds of $15.7
million (assuming a sales price of $16 per square foot) and all nonhousing
funds generated over the 45-year term of the Redevelopment Plan, net of
adoption/administration costs, of $10.1 million.
The remaining $5.1 million of project costs would need to be underwritten
by the City General Fund, or another source, without reimbursement from
the Agency. In addition, the Agency would have no more funds to
implement any other nonhousing redevelopment projects over the 45-year
duration of the Redevelopment Plan.
ROSENOVV SPEVACEK GROUP, INC. PAGE 24
REDEVELOPMENT FEASIBILITY STUDY
CITY OF DUBLIN
Estimated Redevelopment Costs
Office Reuse of Scarlett Ct. Area
INITIAL AGENCY COSTS/1
(Includes acquisition, relocation, demolition,
and goodwill.)
LAND SALE PROCEEDS /2
Total Cost 1/
$ 30,932,789
Cost Per
SF
REQUIRED SUBSIDY
To be funded by the following sources:
All Agency nonhousing revenue
(net of adoption/admin costs)
Other sources, to be determined
31.55
$ 15,687,504 $ 16.00
$ 15,245,285
10,108,663
5,136,622
$ 15.55
TABLE 3
FOOTNOTES:
1/Include preliminary cost estimates for the following:
Address Business(es)
6500 Scadett Ct. Miracle Auto Painting
6380 Scarlett Ct. Smog Station
Gil's Body Work
All Glass
6451 Scarlett Ct. Goodrimics Promotions Inc.
Repo Connection
6389 Scarlett Ct. Kobold Supply
6363 Scarlett Ct. Dolan Lumber
6331 Scarlett Ct. No. Califomia Heat Pump Inc.
Taylor Drywall
PEP Wholesale
6341 Scarlett Ct. Viking Distribution Co.
Brown and Fessler
Harvey Imports
6355 Scarlett Ct. RUUD Heating and Cooling
Diablo Engine and Machine
Fairway Packaging
Larry Presson Distribution
Mail Service Company
AA Fire System
6301 Scarlett Ct. El Monte RV Center
6265 Scarlett Ct. U-Haul Center of Dublin
2/Assumes cleared site sell at comparable market val
($16 per square foot)
Conclusions on Economic Feasibility of Redevelopment
A summary of the Agency's potential revenues and expenditures
associated with adoption and implementation of a redevelopment program
involving Subarea 8 is presented in Table 4 below. Because of the
potential high cost of implementing a successful redevelopment program
in Subarea 8, RSG would not recommend proceeding with a
redeveloPment project area in this area.
ROSENOW SPEVACEK GROUP, INC. PAGE 25
REDEVELOPMENT FEASIBILITY STUDY
CITY Of DUBLIN
Initial and Ongoing Redevelopment Costs- Subarea 8 Only
Budget Item
(Expressed in Current Dollars)
Adoption of Redevelopment Plan
Project Implementation Costs
Scarlett Court Redevelopment/Office Project 1/
Agency Administrative Costs 2/
Total Adoption/Implementation Costs
TABLE 4
Without With
Scarlett Ct. Scarlett Ct.
Project Proiect
$ 250,000 $ 250,000
0 15,245,285
1,500,000 1,500,000
$ 1,750,000 $ 16,995,285
(Over 45 Years) Total Nonhousing Tax Increment Revenues $ 2,213,804 $ 11,858,663
Redevelopment Surplus/(Shortfall to be absorbed
by City General Fund or other sources)
$ 463,804 $ (5,136,622)
1/Per Table 3. Excludes financing costs.
2/Assumes $75,000 per year for Agency administriative, legal and accounting costs
3/ From Table 1
Fiscal Impact on city's General Fund
Redevelopment financing essentially caps the amount of property tax
dollars collected by affected taxing agencies that collect taxes within the
redevelopment project area. The affected taxing agencies, along with
their respective shares of the current property tax levy, are identified in
Table 5 below. The City General Fund collects approximately 25% of the
property taxes within the Study Area today.
ROSENOVV SPEVACEK GROUP, INC. PAGE 26
REDEVELOPMENT FEASIBILITY STUDY
CITY OF DUBLIN
Affected Taxing Agencies- Dublin Redevelopment Study Area
TABLE 5
Tax Levy
Current Tax ERAF (Used for
Taxing Agency Levy Adjustment 1/ RDA)
0.158119 (0.152772) 0.310891
0.027498 - 0.027498
0.250842 - 0.250842
0.011444 - 0.011444
0.024350 (0.025671) 0.050021
0.015181 (0.010024) 0.025205
0.002278 - 0.002278
0.000938 (0.000581) 0.001519
0.006690 - 0.006690
0.031993 - 0.031993
0.000253 (0.000048) 0.000301
0.254536 (0.026781) 0.281317
0.215877 0.215877
General Levy County of Alameda
Chabot/Las Positas Community College District
Dublin Joint Unified School District
County Superintendent of Schools
County Library
County Flood Control
Bay Area Quality Air Management District
Mosquito Abatement
Bay Area Rapid Transit
East Bay Regional Park
Alameda County Res. Con.
City of Bublin
Educational Rev. Aug. Fund (ERAF)
Subtotal
Override Levy
Dublin Joint Unified School District
East Bay Regional Park
1.000000 1.000000
0.071900 0.071900
0.008800 0.008800
Total Tax Levy 1.080700 - 1.080700
1/ Section 97.4 of the Revenue and Taxation Code requires that disbursements to the Education
Revenue Augmentation Fund be paid from tax revenues from non-redevelopment areas.
Loss of Future General Fund Property Tax Growth
If Subarea 8 were incorporated into a redevelopment project area, the
amount of property taxes collected by the City General Fund would be
capped for the next 45 years, while the majority of future incremental
increases in property tax revenues are diverted to the Redevelopment
Agency. (By Law, the Agency would be required to share approximately
20% of the City's 25% share of property tax increment revenues with the
General Fund if the area was incorporated into a redevelopment project
area) Estimates of the amount of General Fund revenues lost are
enumerated in Table 6 below.
ROSENOW SPEVACEK GROUP, INC. PAGE 27
REDEVELOPMENT FEASIBILITY STUDY
CITY OF DUBLIN
Fiscal Impact of Redevelopment on City General Fund
SUBAREA 8 - WITHOUT OFFICE REUSE
Without Redevelopment
With Redevelopment (Statutory Payments)
TABLE 6
Property Taxes Revenues from Redevelopment Area
(Cumulative)
5 Years 10 Years 20 Years 45 Years
$ 80,701 $ 256,890 $ 807,401 $ 3,811,256
16,140 51,378 161,480 762,251
Net Impact on City
(Net Impact - Discounted at 5%)
$ (64,561) $ (205,512) $ (645,921) $ (3,049,005)
(56,051) (155,802) (370,452) (858,077)
SUBAREA 8- WITH OFFICE REUSE
Without Redevelopment
With Redevelopment (Statutory Payments)
Property Taxes Revenues from Redevelopment Area
(Cumulative)
5 Years 10 Years 20 Years 45 Years
283,311 1,551,117 4,734,000 18,012,161
56,662 310,223 946,800 3,602,432
Net Impact on City
(Net Impact - Discounted at 5%)
(226,649) (1,240,893) (3,787,200)(14,409,729)
(189,401) (909,767) (2,162,283) (4,373,579)
Over the next 45 years, RSG estimates the City would lose approximately
$3.0 million ($0.9 million in today's dollars) to the Redevelopment Agency
without the office project, and $14.4 million ($4.4 million in today's dollars)
With the office project. These amounts represent the difference between
the City's share of the incremental increase in property taxes without
redevelopment, and the amounts required by Law to be paid to the City
General Fund if the area was in a redevelopment project area.
ROSENOVV SPEVACEK GROUP, INC. PAGE 28
Redevelopment Feasibility Study
City of Dublin
Based on the analysis contained in this feasibility study, RSG concludes
that formation of a redevelopment project area within the Study Area
would generally not be legally or financially viable at this time. More
specific conclusions are itemized below:
The Law requires that redevelopment projects contain both physical
and economic blight that cannot be alleviated by the private sector,
govemmental action, or both, without redevelopment.
Based on RSG's research and analysis documented in this Study,
both physical and economic blighting conditions, as defined by
Redevelopment Law, cannot be documented within Subareas 1, 2, 3,
4, 5, 6, and 7.
Subarea 8 exhibits some examples of both physical and economic
blight, but do not constitute a redevelopment project area that is large
enough to facilitate successful and timely implementation of an
economically viable redevelopment program.
Redevelopment may be a necessary tool in five or ten years, if the
Study Area experiences physical degradation and economic conditions
worsen.
In the meantime, RSG recommends that the City continue to invest in
Study Area streetscape improvements, work with property owners to
upgrade properties, and implement marketing programs to stimulate
patronage and reinvestment in the Study Area.
ROSENOVV SPEVACEK GROUP, INC. PAGE 29
Redevelopment Feasibility Study
City of Dublin
ROSENOWSPEVACEKGROUP, INC.
Redevelopment Feasibility Study
City of Dublin
Chris Adams Commercial CB Commercial
Colleen Brooks Retail/Office Broker David Malcolm Property Management
Mike Costa Retail/Office Broker BT Commerdal
,
Patric Davis Retail/Office Broker Lee & Associates
Charlotte Fernandez Retail/Office Broker Alcosta & Assodates
Mike Furay Industrial Broker CB Commercial
Brett Holden Industrial Broker Lee & Associates
Jim Lange Retail/Office Broker Lange Properties
Pete Klein Retail/Office Broker Corrie Companies
Brooks Mothom Retail/Office Broker Grubb & Ellis
ROSENOW SPEVACEK GROUP, INC.
Redevelopment Feasibility Study
City of Dublin
I . - ~ All - . I
2 6900 Amador Valley (Montgomery Wards) Contaminated
3 7249 Village Parkway Pollution Characterization
3 7197 Village Parkway Pollution Characterization
3 7194 Village Parkway Site Work Plan Underway
5 7007 San Ramon Remediation Plan
7 6401 Dublin (Unocal) Site Plan Underway
8 6301 Scarlett Court Contaminated
8 6393 Scarlett Court Site Plan Remediation
ROSENOW SPEVACEK GROUP, INC.
Redevelopment Feasibility Study
City of Dublin
TRI-VALLEY AREA ~ $1.25 - $2.00 $0.65 - $1.45 (gross)
Study Area Combined $1.00 - $2.00 $1.40 - $1.45 (gross)
Subarea 1 $1.25 Not Applicable
Subarea 2 $1.10 - $1.30 Not Applicable
Subarea 3 $1.20 - $2.00 Not Applicable
Subarea 4 Not Available Not Applicable
Subarea 5 $1.10 - $1.25 Not Applicable
Subarea 6 $1.25 - $1.50 Not Applicable
Subarea 7 Not Applicable $1.40 - $1.45 (gross)
Subarea 8 Not Applicable Predominantly Owner
Occupied - Not Available
ROSENOWSPEVACEKGROUP, INC.